News

IRS Proposes Raising User Fees for Installation Agreements

By:

Chris Gaetano

Published Date:

Aug 22, 2016

A new proposal from the IRS would increase fees for existing installment plans, and introduce two new types that would have their own separate fees.

Today if you owe the IRS money, but can't pay them everything you owe at once, you can set up an installment plan. If you do this, however, you will be charged a fee: $120. If you agree to let the IRS take money directly from your bank account, this charge drops to $52, and if you're a low-income taxpayer, then the cost to set up a plan will be $43 regardless of the type of plan. If you default on any of these payment plans, you can restructure or reinstate the agreement for $50.

Under the new proposal, a regular installment agreement will cost $225. If you let the IRS take the money directly from your bank account, the fee will only be $107. Things will be a little cheaper if you do things online. If you decide to make regular payments through the IRS website, the fee will be $149, or $31 if you let the IRS directly take the money from your bank account. Restructuring or reinstating an agreement after a default will become more expensive, costing $89 to set up.

If you are low-income, that is someone who is at an income at or below 250 percent of the dollar criteria established by the U.S. Department of Health and Human Services, then the fee will be $43 for all plans save for the $31 where you go online to set up a direct debit agreement with your bank.

The IRS, in the proposal, said the new fee structure more precisely accounts for the costs of administering the various types of installment agreements available to taxpayers.

"Requesting installment agreements in person or over the phone and receiving payment through means other than direct debit is more costly for the IRS to administer, and the proposed user fees reflect these costs. Similarly, this recent analysis has resulted in the availability of reduced user fees to taxpayers for those options that cost less for the IRS to administer. By offering a range of installment agreement options at a range of fees, the IRS is assisting taxpayers in coming into compliance with their tax payment obligations, which benefits tax administration and provides an enhanced service to taxpayers," said the IRS.